Credit Saison Co., Ltd. · TSE:8253
Credit Saison — FY2023 Earnings Presentation
55 slides from Credit Saison's earnings presentation, May 15, 2024
Slide 1: Medium-Term Management Plan (FY2024-2026) and Summary of FY2023 Financial Results
Medium-Term Management Plan (FY2024-2026) and Summary of FY2023 Financial Results May 15,2024 Credit Saison Co., Ltd. Tokyo Stock Exchange Prime Market, Securities Code: 8253
Slide 2: Review of the Previous Medium-Term Management Plan (FY2022-2023)
Review of the Previous Medium-Term Management Plan (FY2022-2023)
Slide 3: Primary Management Indicators
Primary Management Indicators ✓ Achieved consolidated operating profit target of 70.0 billion yen that was set in the previous medium- term management plan (FY2022-2024) one year ahead of schedule ✓ Established a foundation for our next stage, with a capital and business alliance with Suruga Bank, a
Slide 4: Results by Segment
Results by Segment ✓ Building a foundation for each business that will lead to the new medium-term management plan Global Business FY21 3.7billion yen→ FY232.4billion yen (-1.3billion yen) While the Lending Business steadily expandedReboundary impact of realized gains, etc. in the Investment Busines
Slide 5: Credit Saison Group Vision
Credit Saison Group Vision
Slide 6: Vision for 2030: Global Neo Finance Company
Vision for 2030 GLOBAL NEO FINANCE COMPANY — A global comprehensive life services group with finance at the core — We will not remain as a mere finance company, but will develop global synergies in the "Saison Partner Economic Zone" created through partnerships 01 02 03 Strong presence in Comprehens
Slide 7: Strong presence in domestic and international target customer segments
01. Strong presence in domestic and international target customer segments Domestic International High net worth individuals and corporations Underserved individuals and MSMEs (sole proprietors and SMEs) Differentiation strategy that creates cross- Realizing financial inclusion selling and up-sellin
Slide 8: Comprehensive lifestyle services with financial services at the core
02. Comprehensive lifestyle services with financial services at the core ✓ Aim to build a talent portfolio that achieves customer strategy and improves productivity ✓ Improve productivity through digital and innovation Finance/payment Real estate Digital Global specialists specialists human resource
Slide 9: "Saison" recognized as a global financial services player
03. "Saison" recognized as a global financial services player ✓ Regional development of an alliance model that leverages the Fintech ecosystem ✓ Evolve the provision of value with finance at its core through business expansion in both domestic and overseas operations and bi-directional integration I
Slide 10: New Medium-Term Management Plan (FY2024-2026)
New Medium-Term Management Plan (FY2024-2026)
Slide 11: Goals and Priority Themes
New Medium-Term Management Plan (FY2024-2026) Goals and Priority Themes BY FY2030: New Medium-Term Management Plan (FY2024-2026) GLOBAL NEO FINANCE Business profit of COMPANY 100.0 billion yen and ROE of 9.5% Improving corporate value PBR of 1, and market capitalization of 1 trillion yen Priority Th
Slide 12: Concepts for Realizing Management Conscious of Capital Costs and Stock Prices
Concepts for Realizing Management that is Conscious of Capital Costs and Stock Prices Improve profitability Consolidated business profit of 100.0 billion yen ROA Increase asset efficiency Reduction equivalent to 70% of cross- ROE↑ shareholdings Utilize interest-bearing debt 9.5％ Financial Maintain a
Slide 13: Business Profit / ROE / EPS Outlook
Business Profit / ROE / EPS Outlook ✓ Create a pathway to achieving ROE of over 10% during the next medium-term plan period (from FY27) 9.5% 8.8% *Excl. 8.3% negative goodwill 490 yen 7.5% 7.5% 442 ROE 6.5% 100.0 *Excl. negative 332 goodwill 319 billion yen 278 EPS 226 90.0 77.0 71.9 Business profit
Slide 14: Shareholder Returns
Shareholder Returns ✓ Based on the consolidated financial results for FY23, we have increased the ordinary dividend by 5 yen from the latest dividend forecast to 105 yen per share. ✓ The basic policy of "stable and continuous dividends" remains unchanged, but the dividend payout ratio will be 30% or
Slide 15: Financial Strategy
Financial Strategy Medium-term consolidated financing strategy "Maintain financial stability" and "pursue a balance in financing costs" Productivity Growth 01. Maintain and improve R&I ratings, Maximize and obtain multiple ratings 02. Stability (reduce liquidity and Corporate Value interest rate flu
Slide 16: Cash Allocation
Cash Allocation Concept for New Medium-Term Basic Policy Plan (FY2024-2026) ✓ Strengthen investments for continued growth ✓ Strengthen "earning power" through growth investments ✓ Promote structural reforms to increase capital efficiency ✓ Improve "earning power" for existing businesses ✓ Achieve st
Slide 17: Human Capital Initiatives
Human Capital Initiatives Settlement bonuses / special bonusses Improve employee motivation via bonuses that reflect Human performance resources Bonuses Average annual employee salary FY21→FY23 up approx. 10％ development Shareholding association system Improve Organizational Shareholding Create a cu
Slide 18: Human Capital Initiatives
Human Capital Initiatives Career development support and human resources investment Human resources development to achieve customer strategy and to improve productivity Human Example initiatives <Developing specialists> resources Bonuses ✓ Support for acquiring qualifications＜Improve financial liter
Slide 19: CSDX <VISION>
CSDX <VISION> ✓ By utilizing digital technologies, we aim to change and transform our businesses and become a company that leads in the digital era Create moving customer experiences Transform employee experiences Customer Experience Employee Experience 5 Basic Strategies for CSDX Optimize digital i
Slide 20: CSDX <Aiming for DX by All Employees>
CSDX <Aiming for DX by All Employees> ✓ We aim to take the knowledge that we have accumulated through internal development and human resources development and deploy it throughout the company, and to create a system in which all employees digitize their own work Creating digital human resources Appr
Slide 21: CSDX <Complete Innovation of Business Processes, Centered around Generative AI>
CSDX <Complete Innovation of Business Processes, Centered around Generative AI> ■SAISON AI ■Complete Digitalization of Business Processes ✓ Actively holding briefing sessions and sharing usage examples to promote employee utilization Operations Contracts ・Digitalizing reception and screening Digital
Slide 22: Business Strategy
Business Strategy
Slide 23: Business Profit Trend Plans by Segment
Business Profit Trend Plans by Segment (billion yen) FY23 FY24 FY25 FY26 FY23 & FY26 (a) plan plan plan (b) plan diff. (b-a) Payment 19.2 20.5 24.3 28.9 +9.7 FY23 71.9 Strengthen revenue base via member structure reform, and business reform via DX・AI billion yen Lease 4.3 4.0 4.0 4.5 +0.2 Despite th
Slide 24: Vision for Global Business
Vision for Global Business Global Business Theme Make the world more prosperous and sustainable through financial inclusion Establish a global lending business, Create positive impacts and have it become our through our business third earnings pillar in each country ✓ Horizontal expansion of Indian
Slide 25: Global Lending Business (1) Step Strategy
Global Lending Business (1) Step Strategy ✓ Aim to build Credit Saison's unique global lending business by developing it to suit each country's market, based on the India stepped strategy Beyond ➢ BtoBtoC→BtoC stepped strategy Difficulty that *Indian model case of entry Direct lending Partnership Di
Slide 26: Global Lending Business (2) Alliance Strategy
Global Lending Business (2) Alliance Strategy ✓ Through alliance strategies with various partners, aim to develop to fit each country's market and establish a unique economic zone Fintech lender Service provider >Partner lending for individuals >Embedded finance Non-bank BtoBtoC Sales agents >Wholes
Slide 27: Credit Saison India: Trends in Consolidated Contribution Profit
Credit Saison India: Trends in Consolidated Contribution Profit ✓ In FY23, growth rate moderated due to increased allowance for loan losses due to regulatory changes in partnership lending (fintech alliance lending) ✓ From FY24 onwards (new medium-term plan period), aim to accelerate the pace of pro
Slide 28: Receivable balance
Receivable balance ✓ The balance of receivables in FY23 doubled from the previous year ✓ We will continue to strengthen direct lending while controlling risks, aiming for the lending of 600.0 billion yen in three years Approx. 600.0 (billion yen) billion yen 6,000 600.0 第2ステップ Branch lending Direct
Slide 29: Growth Strategy by Verticals
Growth Strategy by Verticals ✓ Aim to further expand direct lending by expanding touch points/networks with customers Business model Growth strategy ✓ Expand customers by increasing branches B to C / B to B（Direct Lending） <No. of branches> and utilizing sales agents ✓ Differentiate from other compa
Slide 30: Appendix: Details by Business Model
＜appendix＞Details by Business Model ✓ Enables product design tailored to risk level Product Wholesale Partnership Embedded finance Branch lending Loans through alliances Loans to local Loans through alliances Loans utilizing branches Overview non-banks with fintech players with non-financial and sal
Slide 31: Appendix: Solid Credit Backed by Data
＜appendix＞Solid Credit Backed by Data ✓ Build a solid credit model that combines in-house data and public data ✓ Achieve risk control through optimal credit methods tailored to products and target customers For individuals (embedded finance) Credit Build an outstanding credit model by Build a credit
Slide 32: Governance Structure
Governance Structure ✓ Strengthen the Japan-IHQ support system to support the rapidly expanding local （Credit Saison India）and build a strong governance system through collaboration with new shareholder Credit Saison ＋ Saison International ＋ Management / Support / Restraint Group management Applicat
Slide 33: Long-Term Goals
Long-Term Goals ✓ Moving towards a sustainable growth stage through differentiated, high-return businesses ✓ Aiming to be a top 10 non-bank in India Receivables balance 《Startup》 《Scaleup》 《Sustainable growth》 Goals (billion yen) New medium-term management plan Moving towards a ≈ FY24-26 sustainable
Slide 34: Finance Business Priority Initiatives
Finance Business Priority Initiatives Expanding profits through Expanding Group businesses guarantee business 01. Credit Saison x Saison Fundex Growth in guarantee business and real estate finance field Growing Strengthening real estate cooperation finance with 02. Credit Saison x Suruga Bank busine
Slide 35: Credit Saison x Saison Fundex
01. Credit Saison x Saison Fundex FY21 FY26plan Off-BS Off-BS ✓ Aim for growth in “asset efficiency” and “increase in Approx. Approx. revenue scale” by strengthening the guarantee business. 30％ 45％ Guarantee business ■ Trends in guarantee balance (billion yen) ✓ Expand secured guarantee area and 1,0
Slide 36: Real estate finance business: expanding products and receivables balance
✓ Aiming to increase receivables balance by expanding products for business people, seniors, and corporations Real estate finance business ■Trends in receivables balance (billion yen) ✓ Strengthen relationships with 1,200.0 12,000 Leasebacks sales and business partners Saison ✓ Expand handling of pr
Slide 37: Credit Saison x Suruga Bank
02. Credit Saison x Suruga Bank ■Finance field / new loan amounts Nov. 2023 Oct. 2023 *Total of collaboration loans and housing loans Joint development of Collaboration in the real estate finance mortgage loan business Began jointly providing Suruga Bank began handling Original plan FY24-27 "Credit
Slide 38: Resetting priority areas for collaboration
■Resetting priority areas for collaboration ✓ We reconsidered the resource constraints and priorities for IT, etc., and for the time being have postponed the Saison branch initiative that was scheduled to open within this fiscal year ✓ We are resetting our three priority areas to become a Neo Financ
Slide 39: Payment Business Priority Initiatives
Payment Business Priority Initiatives Accelerate premium tier and SME strategies and reduce costs through structural reforms 01. Premium strategy Expand share of customers with Reduce costs high unit prices and high utilization rates Utilize DX and AI 02. Expand asset / non-asset profits Increase pr
Slide 40: Premium strategy
01. Premium strategy ✓ Increase profitability by expanding the share of high-unit-price, high-utilization customers ■Shopping transaction volume (trillion yen) Premium strategy 7 Promote premium cards and provide added value trillion yen Aiming to increase loyalty 6.17 Premium Approx. 5.68 Approx. 3
Slide 41: Membership Structure Transformation through Premium Strategy
Membership Structure Transformation through Premium Strategy Results of and Outlook Strategy: Expand from mass market (individuals) to the premium/ corporations(sole proprietorships/SMEs) market Change member structure Increase unit price Expand transaction volume ■ Cardholder structure ■ Shopping p
Slide 42: Expand Asset / Non-Asset Profits
02. Expand Asset / Non-Asset Profits ✓ Build a stable foundation through member structure reform, and improve profitability through rate revisions, etc. ■Card shopping revolving balance Improve profitability and (billion yen) 111% 600.0 6,000 YoY 107% limit balance decreases 107% Steps for Raise rev
Slide 43: Cash advance balance and annual fees revenues
■Cash advance balance ■Annual fees,etc. revenues (billion yen) (billion yen) 2,200 YoY 220.0 103% 99% 103% 204.0 28.0 280 YoY 94% billion yen 116% 107% 113% 101% 20.5 billion yen 183.0 21.0 210 177.5 173.9 172.8 160.0 1,600 14.0 140 13.0 11.2 9.3 9.9 7.0 70 1,000 100.0 0 FY24 FY25 FY26 FY24 FY25 FY2
Slide 44: Alliance with Beisia Group
Alliance with Beisia Group ✓ Aim to create synergies by leveraging each other's strengths and resources to realize both companies' visions × Comprehensive Vision Providing a "richer life" Lifestyle Services Group ・Know-how from a credit card company that originated in the Value ・More than 2,000 stor
Slide 45: Implement Cost Structure Reforms
03. Implement Cost Structure Reforms ✓ Reduce costs and improve profit margins by using DX and AI to review operations ■ Cost ratio to operating revenue for payment business DX・AI DX and AI to save manpower in operations ・Improve automation rate and accuracy during call 20% 80% taking, screening, an
Slide 46: Summary of FY2023 Financial Results
Summary of FY2023 Financial Results
Slide 47: FY23 Financial Results Digest
FY23 Financial Results Digest ✓ Profit attributable to owners of parent reached 72.9 billion yen (+67.4% YoY), a record high. ✓ Revenue increased due to steady performance in the payment and finance businesses, as well as due to an expansion of the lending business in the global business. ✓ Based on
Slide 48: FY23 Business Results
FY23 Business Results (100 million yen) FY21 FY22 FY23 YoY Consolidated Net revenue 2,990 3,226 3,616 112.1% Business profit 523 609 719 118.0% Profit attributable to owners of parent 353 435 729 167.4% Non-Consolidated Operating revenue 2,524 2,661 2,838 106.7% Operating profit 216 336 378 112.6% O
Slide 49: Overview of Business Results by Segment
Overview of Business Results by Segment (100 million yen) Net revenue Business profit FY22 FY23 YoY FY22 FY23 YoY Payment 2,202 2,352 106.8% 101 192 190.0% Lease 120 125 104.1% 51 43 84.0% Finance 507 585 115.3% 222 282 127.3% Real estate related 241 239 99.0% 130 164 125.6% Global 113 272 239.3% 90
Slide 50: Contribution by Consolidated Companies
Contribution by Consolidated Companies ■Business profit Difference (100 million yen) Consolidated Business profit Non-consolidated Ordinary Profit Differenc FY23 719.4 461.5 257.8 (Year-on-year difference) ＋109.6 ＋27.3 ＋82.3 ■Contribution by Consolidated Companies (100 million yen) Contribution Year
Slide 51: Credit Risk
Credit Risk ✓ Delinquency over 90 days remained at a low level.Allocation of additional provision for loss on interest repayment with the future in mind.（2.3billion yen） Delinquency over 90 days(consolidated) Delinquency over 90 days(non-consolidated) (100 million yen) Credit card business total cre
Slide 52: Interest Repayment Claims
Interest Repayment Claims ✓ Although the number of new claims was lower than the previous year, the price per claim has been higher than expected, and therefore, additional provision for loss on interest repayment has been made for the future (consolidated and non-consolidated: 2.3 billion yen). ■No
Slide 53: FY24 Earnings Forecast
FY24 Earnings Forecast ✓ Consolidated Profit attributable to owners of parent ➢FY23 Reversal effect of the gain on negative goodwill from the conversion of Suruga Bank into an equity-method affiliate (approx.-22.0 billion yen), etc. ✓ Non-Consolidated Profit ➢FY23 Reversal of extraordinary income (g
Slide 54: Financial Policy
Financial Policy ■Sound financial base ■Structure of interest-bearing debt • Credit Rating R&I A+ • Almost 80% of the interest-bearing debt is composed of long-term funds • Issuance of 20 years bonds, first in card companies • Fixed interest rate procurement accounts for about 70% June 2017 10 billi
Slide 55: ESG/External Evaluations (an example)
ESG/External Evaluations (an example） B rating First Certified for for 2 selection in 7 consecutive consecutive 2024 years years Received a B rating in the 2023 CDP Climate Change ESG index adopted by the GPIF consisting of ESG index used by GPIF the selects Questionnaire Japanese companies that exc